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Title:Patent abandonment and subsequent cumulative inventions
Author(s):Zheng, Wen
Director of Research:Mahoney, Joseph
Doctoral Committee Chair(s):Mahoney, Joseph
Doctoral Committee Member(s):Somaya, Deepak; Bercovitz, Janet; Shah, Sonali
Department / Program:Business Administration
Discipline:Business Administration
Degree Granting Institution:University of Illinois at Urbana-Champaign
Subject(s):Patent Abandonment
Cumulative Invention
Knowledge Spillover Pool, Absorptive Capacity
Complementary Patents
Innovation Search
Organizational Learning
Abstract:This dissertation explores how the focal firm’s patent abandonment strategy can facilitate cumulative inventions by external inventors, as well as subsequent cumulative inventions by the focal firm to enable value creation and value capture. To keep a patent in force in the United States, a firm must pay maintenance fees at three subsequent time-periods after the issuance of the patent. The focal firm’s patent abandonment reduces transaction costs of external inventors conducting cumulative inventions that build on the focal firm’s abandoned patent, which creates a larger and broader knowledge spillover pool. Further, the firm’s patent abandonment can be a positive-sum game, in which the focal firm can also benefit by identifying distant knowledge as well as potential new inventors’ inventions. This patent abandonment allows the focal firm to learn from the knowledge spillover pool created through its patent abandonment. Following Chapter 1, which provides the introduction, Chapter 2 examines how the focal firm’s patent abandonment influences external inventors conducting cumulative inventions, which build on the focal firm’s abandoned patent. I submit that the focal firm’s patent abandonment opens up invention to the “wisdom of crowds,” and reduces external inventors’ licensing costs and litigation threats from the focal firm holding the initial patent. Thus, the focal firm’s abandoned patent provides external inventors greater opportunities to conduct more research that builds on the focal firm’s abandoned patent. Further, a focal firm’s patent abandonment could transform its own limited internal and external search into broader external inventors’ collective search. Thus, inventions by external inventors in the knowledge spillover pool created through the focal firm’s patent abandonment can become both larger and greater breadth. Consistent with this theory development, I corroborate empirically that the focal firm’s patent abandonment can increase the amount and breadth of external forward citations of the abandoned patent. Chapter 3 and Chapter 4 focus on how the focal firm can create and capture value through its patent abandonment. Chapter 3 examines under what conditions the focal firm can learn more from the knowledge spillover pool created through its patent abandonment, which is a necessary condition for the focal firm to create and capture positive economic value from its patent abandonment. I submit that the knowledge spillover pool created by external inventors due to the focal firm’s patent abandonment can facilitate the focal firm’s subsequent learning and consequently increase its subsequent inventions. Such learning from the knowledge spillover pool by the focal firm is greater when this pool contains higher quality external inventions and larger number of external inventors. This chapter further explores how moderating factors, such as the focal firm’s: (i) explorative search path in its invention creation stage; (ii) internal use of the abandoned patent in its invention development stage; (iii) experience in leveraging external knowledge, and (iv) self-ownership of complementary patents, influence the efficiency and effectiveness of its learning from a more valuable knowledge spillover pool. Chapter 4 explores how the focal firm can use patent abandonments to overcome its own limited search in subsequent exploration and exploitation of its patent. In particular, I examine which inventions within the knowledge spillover pool developed by external inventors are more likely to be integrated by the focal firm in its subsequent inventions. Through its patent abandonment, the focal firm could then rely on collective search to identify inventions containing knowledge that is more distant and developed by potentially new external inventors, which lowers the cost of the focal firm compared to renewing its patent and conducting its own internal search. Due to the focal firm’s path dependent search behavior and its limited absorptive capacity, the focal firm’s reliance on external inventors’ collective search would likely be more efficient and effective in its familiar domain. The empirical results show that the focal firm is more likely to integrate external inventors’ inventions into its subsequent inventions if the invention is: (i) combined with knowledge that is distant from the focal firm’s existing knowledge base; and (ii) created by new external inventors. Furthermore, the focal firm would be more likely to integrate inventions containing knowledge that is more distant and created by new inventors, if the inventions are in the areas where the focal firm has greater technological strength. The fifth and final chapter offers conclusions, provides research limitations, and suggest future research directions. To address some of these limitations, suggestions for future research that builds on this dissertation are also provided.
Issue Date:2019-04-18
Rights Information:Copyright 2019 Wen Zheng
Date Available in IDEALS:2019-08-23
Date Deposited:2019-05

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